Net Insight Interim Report January-June 2004

In May, Net Insight received an additional order from a European media operator regarding network equipment for video and data transport. The network will connect an additional number of European cities.

 

In June, Net Insight received further orders regarding network equipment from Allied Telesyn. The orders include equipment to Matanuska Telephone Association (MTA), Alaska's largest telephone cooperative and Midwest Tel Net. These orders will expand both operators' Triple Play networks. Allied Telesyn resells Net Insight's equipment and has previously successfully deployed a Triple Play solution at Midwest Tel Net and at Matanuska Telephone Association.

 

Net Insight received an additional order in June from Broadwing regarding equipment to expand an existing media network to several cities. A Broadwing customer, Ascent Media Network Services (AMNS), will utilize Net Inisght's NimbraTM platform to provide its customers real-time video and data transfers over Broadwing Communications' Media Services Network. AMNS will rely on Net Insight equipment located at AMNS facilities in New York, Minneapolis, Los Angeles and London, as well as the Net Insight equipment installed on the Broadwing network.

 

Also in June, Net Insight received a further order regarding additional Nimbra nodes from a European customer. The order is an addition to a previous order and regards an expansion of the network to several cities.

 

Furthermore, Net Insight received an add-on order in June from the German systems integrator Controlware.

 

The American telecommunications operator Broadwing launched its digital media network in April based on equipment from Net Insight ordered in December 2003. It is a five-city coast to coast network in the US that will be used for qualified TV and video transport.

 

The rollout of the media network at Westdeutscher Rundfunk (WDR) has commenced and the installations proceed according to the project plan with five cities already connected. All 14 locations in Nordrhein-Westfalen, which are included in their Regionet, will be connected by October 2004. WDR organized an official launch of their state-of-the-art Regionet in July.

 

Net Insight has announced the availability of an OC-48/STM-16 module for its Nimbra transport platform. The Nimbra platform powers terrestrial multi-service networks used by broadcasters and by telephone and cable-TV operators to deliver real time video, file transfer, LAN connectivity and voice service all in the same-switched network. The new 2-port module, with a speed of 2.4 gigabit/s per port, will enable broadcasters and operators with a faster network that can be expanded to more locations. Broadcasters and operators can take advantage of non-blocking on-board switching capacity. The new module enables operators and service providers to provide TV, Video on Demand (VOD), Internet, and Telephony over xDSL or fiber to the customers all with guaranteed QoS, and 95% bandwidth efficiency.

 

In light of the weak demand during the years of 2001-2003, the Board instructed the management to cut the Company's costs. Due to gradually improving market conditions, the Board has now determined that Net Insight is well positioned to invest in the development of new and emerging products. Therefore, the costs within research and development will increase slightly to build the foundation of an improved customer offer, which should result in increased sales and improved results. The acquisition of Q2 Labs, operational within optical networks, was a step towards that direction.

 

At the extraordinary general meeting on April 13 2004, the board's decision from March 14 2004 regarding an issue of maximum 2,500,000 new shares of series B, was approved. The right to subscribe to the new shares was only for the shareholders of Q2 Labs AB, with the right and the duty to pay for the new shares through a transfer of shares in Q2 Labs AB. Due to the approval of the extraordinary general meeting, all terms for closing the deal have been fulfilled and the final acquisition of the company took place on April 15.

 

Furthermore, it was decided to approve the board's decision from March 19 2004 regarding a directed share issue to four units within Constellation Ventures II Group of (i) maximum 31,000,000 new shares of series B and (ii) debentures with a nominal value of SEK 1,000 in aggregate 9,790,000 detachable warrants to subscribe for new shares of series B. Subscription and payments for the new shares of SEK 2.10, i.e. a total sum of SEK 65,100,000, and subscription and payments for the debentures of SEK 1,000 took place on April 15, 2004.

 

Clifford H. Friedman (from Constellation Venture II Group) was elected new board member. Tomas Torlöf has left the board.

 

On April 5, Steven East was hired as Global Sales Manager. Steven has over 17 years of worldwide sales management experience from Great Britain, Europe and the US. Most recently, Steven was Vice President International Carrier Division for Broadwing Communications Inc. Additionally Steven has 10 years experience at Nortel Networks, where he focused on the cable and telephony markets. Steven is based at Net Insight's office in the US.

Net Insight participated very successfully at the media show NAB 2004, National Association of Broadcasters, in Las Vegas during April 19-22 where approximately 1,200 companies within the professional media industry were exhibiting. Net Insight's booth was very well visited and the attention from customers from both Europe and USA was great. Net Insight's customer EBU, European Broadcasting Union, disposed one part of the booth.

 

Furthermore, on May 18-19 at the EBU Headquarters in Geneva, the WBU-ISOG Broadcasters' meeting was held and hosted by EBU.

 

Moreover, Net Insight was represented in Alphatron's booth at Broadcast Asia2004, taking place on 15-18 June at Singapore Expo.

 

SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD

 

Staff

The total number of employees at the end of the period was 69 (65). The American subsidiary had 5 (5) employees.

Liquidity

The liquid funds at the end of the period amounted to SEK 106.7 million (47.7). The Company has had good collection supporting the healthy liquidity. To eliminate the risk under one delayed receivable a provision has been made of SEK 2 million in the second quarter.

Investments

Investments in instruments, equipment and improvements to premises amounted to SEK 0 (0). SEK 6.3 million (3.9) of the Company's research and development expenses have been capitalized during the period. These have been accounted for as intangible fixed assets.

Financing activity

Parent company

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